RBC Raises HCN Target To $73, S&P Reiterates BXP ‘Strong Buy’

By Michael Aneiro

RBC today reiterated its outperform rating on shares of Health Care REIT Inc. (HCN) and increased its 12-month price target to $73 per share, from $68 previously. Shares gained 42 cents Monday to trade at $70.21. RBC said the company’s senior housing RIDEA portfolio (you can read more about HCN and the RIDEA structure here) “will continue to generate above average growth given the strong fundamentals in the space,” and that it’s encouraged by the credit rating agencies increased acceptance of the RIDEA structure.

In other REIT news, S&P Capital IQ today reiterated its “strong buy” opinion on Boston Properties (BXP) and its $131 target price. BXP gained $1.49 Monday to $107.74. “We see incremental earnings from new development projects accelerating in ’14. BXP hiked its ’13 dividend by 18%, to $2.60, and we estimate available cash flow could justify a further increase over the next 12 months,” S&P writes.

And Merrill Ross of Wunderlich Securities explores whether it’s too late to buy mortgage REIT stocks after they’ve outperformed the broader market so far this year in terms of price appreciation:

We remain constructive on selected stocks in the peer group, because excluding the high and low valuations, the group trades slightly below trailing book value on average, which has historically proven to be a good entry point. We think investors should focus on companies with high dividend coverage and well diversified earnings streams to protect and enhance earnings in 2013. Our top picks remain American Capital Mortgage (MTGE) ($26.15, Buy) and Western Asset Mortgage (WMC) ($23.59, Buy), which we project will create total returns in 2013 that are not reflected fully in their current valuation.